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TMI Blog2016 (1) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Madras High Court in the case of CIT vs. Southern Roadways Ltd. [2006 (10) TMI 82 - MADRAS HIGH COURT ] held that up-gradation of computers by changing certain parts thereby enhancing the configuration of the computers for improving their efficiency without making any structural alternations is not change of an enduring nature. He also observed that in assessee's own case, in assessment year 2007-08 has held that if the expenditure has been incurred by the assessee for up-gradation of the software, the expenditure has to be allowed as a revenue expenditure and if the expenditure has been incurred for the first time for acquiring this software, the expenditure is to be treated as capital expenditure, therefore, he deleted the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Assessing Officer observed that the assessee has claimed expenses on software amounting to ₹ 10,11,000/-. The Assessing Officer treated the same as capital expenditure and allowed depreciation to the income of the assessee. 4. On appeal, Commissioner of Income Tax (Appeals) observed that the Hon'ble Delhi High Court in the case of CIT Vs. G.E. Capital Services Ltd. [164 Taxman 46 (Delhi)] has held that expenditure incurred by the company on computer software, which was not customized software and said software required frequent up-gradation and hence, it was held as revenue expenditure. The Commissioner of Income Tax (Appeals) also noted that the Hon'ble Madras High Court in the case of CIT vs. Southern Roadways Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Commissioner of Income Tax (Appeals) which is inconformity with the order of the Hon'ble Jurisdictional High Court and hence, the ground of appeal of the Revenue is dismissed in the year under consideration. 8. Ground No.2 of the appeal is directed against the order of the Commissioner of Income Tax (Appeals) deleting the excess interest of ₹ 46,12,758/- made by the Assessing Officer. 9. We have heard rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case, facts of the case are that the Assessing Officer observed that the interest was paid by the assessee @ 9.06% whereas the assessee company charged interest @ 5.13% on the deposits/advances. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed the loan funds for the specific purpose, for which loan was obtained as and when required for the purpose of working capital for running the day to day operation of business; for the purpose of implementation of VRS as approved by the Government of India and for the purpose of purchase of computers as approved by the Government of India. The Commissioner of Income Tax (Appeals) therefore, held that there is no non-business utilization of fund and diversion of fund proved which the Assessing Officer had alleged in the assessment order without any basis. The interest debited in the profit loss account and claimed by the assessee is genuine and for the purpose of business only since the interest is paid or payable to the bank or financia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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